When Zero Is a Temporary Choice

Until recently this relief looked like a story with a deadline: small-business relief runs until the end of 2026, and after that, the standard regime. In August 2026 the date moved: Small Business Relief was extended to the end of 2029. But what moved was the date — not the mechanics. And it is the mechanics people stumble on.

Because Small Business Relief is not an exemption a company "has." It is a regime a company elects, on the conditions set out below. The extension bought more time; it did not make the relief automatic, and it did not remove its traps.

What actually changed

By Ministerial Decision No. 131, the Ministry of Finance extended the relief: it can now be claimed for tax periods ending on or before 31 December 2029. The threshold is unchanged — revenue no higher than three million dirhams; it was not raised. Only the horizon moved: the window that used to close at the end of 2026 now closes at the end of 2029.

Everything else in the provision works as before. And it is that "everything else" that matters.

Not an exemption, but a choice

The relief is established by Article 21 of the Corporate Tax Law. In essence: a resident person with revenue no higher than three million dirhams may elect to be treated as having derived no taxable income for the period — and the tax payable is then zero.

The key word is "elect." The relief does not apply by itself. The company still registers with the Federal Tax Authority and files a return; the zero arises not from the fact of small turnover but from a choice made in that return. No election — no relief for that period.

And the threshold is measured by revenue, not profit. Three million is turnover, not what remains after costs.

The threshold looks back, not only at the current year

A detail easy to miss, and the extension does not remove it. The condition is revenue no higher than three million not only in the current period but in all previous ones. Which means crossing the threshold once costs the relief going forward — even if turnover falls below it again the following year.

This is not a switch to be turned on and off from year to year. One period over the line closes the door ahead — now simply within a longer window, to 2029.

What leaves with the choice

Electing the relief is not always a win. For a period in which Small Business Relief is claimed, tax losses and unused interest expenditure cannot be carried forward. For a year closed at a loss or with major investment, zeroing it out with the relief means forfeiting what could have reduced tax later.

And separately: splitting a business artificially to stay under the threshold is a path that falls squarely under the general anti-abuse rule. That is not planning; it is risk.

For free zone companies

If a company claims the zero rate as a Qualifying Free Zone Person, Small Business Relief is not available to it. These are two different regimes, and one must be chosen: either QFZP status with its conditions, or — if there is no such status and the company is resident and under the threshold — the small-business relief. They cannot be combined.

What it means

The extension removed the deadline, not the question. The decision that used to be due by the end of 2026 now has until 2029 — but it still has to be made: whether to elect zero in any given year, and whether you are giving anything up by doing so.

Small turnover makes a company eligible for the relief. But whether it is worthwhile in a given year is decided not by the threshold and not by the deadline, but by the calculation.